[JURIST] The German cabinet [official website, in German] on Monday approved legal conditions [text, PDF, in German] that the government will impose on banks that receive financial assistance through the German financial rescue bill [Financial Stabilization Fund Regulation text, PDF, in German; press release, in German]. The rescue bill [BBC backgrounder], signed into law on October 17, will provide up to 400 billion euros to stabilize and revive the market through loan guarantees, up to 80 billion euros to buy problem assets, and up to 20 billion euros to cover any loan losses. The cabinet had proposed plans to impose a pay cap of 500,000 euros and bonus freezes on the CEOs of all banks that requested help under the bill, but under Monday's regulations, higher pay rates are only deemed "inappropriate." The government is permitted, though, to analyze all risks in the banks' business that could be excessive and to limit their implementation. In addition, any bonuses paid to employees must be "appropriate," and each institution may receive only 10 billion euros for assistance and 5 billion euros to cover risks. Bloomberg has more. The New York Times has additional coverage.
The passage of the German bill follows the passage [JURIST report] earlier this month of a US financial rescue bill [HR 1424 text, PDF]. The final bill authorizes the Department of the Treasury [official website] to establish a Troubled Assets Relief Program (TARP) to purchase troubled assets from financial institutions and to provide insurance and guarantees for any troubled asset originated before to March 14, 2008. It also establishes a Financial Stability Oversight Board to review Treasury actions taken under the legislation.